generation. But with hefty dividends, its capex plans might be adversely impacted.

CIL had total cash reserves of Rs 62,236 crore as of March 31, 2013. It plans to spend Rs 59,500 crore in the 12th plan period between 2012 and 2017 to boost its production capacity and acquire overseas assets besides spending on developing coal blocks in Mozambique.

The finance ministry is working on different ways to achieve its disinvestment target, as the funds are critical to meet its fiscal deficit target of 4.8% in FY14. It is expected that tax revenues will see a record shortfall of Rs 60,000-70,000 crore this fiscal.

CIL's board meeting was triggered by finance minister P Chidambaram who asked heads of central public sector companies to pay higher dividends this fiscal on January 10, in the backdrop of faltering disinvestment plans.

So far, the government has mopped up less than Rs 3,000 crore through stake sale in seven PSUs. The government had also said that those companies where hurdles are making planned disinvestment impossible such as in the case of CIL will need to pay special dividends. The FY14 budget estimate for revenue generation from dividend payment from PSUs is Rs 29,870.12 crore, compared with the revised estimate of Rs 29,996.09 crore in 2012-13 from dividend paid by PSUs.

In CIL, the government had originally planned to divest 10% but lowered it to 5%. Even the 5% stake sale had to be called off as the trade unions opposed to any stake sale in the company. The government had instructed the company to pay a special dividend if the company is unable to go ahead with the divestment plan.

Indian Oil Corp (IOC), where the government plans to sell a 10% stake has been stuck as the oil ministry is not favoring disinvestment, citing a loss of over 50% in valuation of IOC scrip since 2010. The finance ministry, which is looking for a feasible and agreeable alternative, has asked ONGC and Oil India LTD if they can buy the government stake in IOC.

“The petroleum ministry has been asked by the finance ministry to look at alternatives in case the Indian Oil offer for sale does not go through. This can be considered an alternative, though how much stake and at what price is for the companies involved to decide,” said a senior finance ministry official.